Liquidating assets definition

In addition, the term "liquidation" is sometimes used when a company wants to divest itself of some of its assets.

In other words, there isnt enough cash from operations to pay investors a return on their investments, so some of the business assets are sold in order to give money to the investors.Businesses can liquidate their assets for any number of reasons, but the main two reasons are the company is failing and restructuring or investors want to leave the business.Liquidations are far more common in bankruptcies and situations where the business is closing because it cant support itself with revenues than any other instance.There is no particular magic involved in this valuation.The assets of a running business include its clients and their purchases.Thus an owner selling his or her business for cash as a going concern is technically liquidating it—but in usual parlance the term is applied only to a situation where a business is closed and all of its assets are sold.